In the savings-investment diagram, we know that an increase in the real interest rate raises the level of saving because

Question

Quizplus · Accepted Answer

In the savings-investment diagram, the saving curve slopes upwards, indicating that as the real interest rate increases, the level of saving increases. This is because higher interest rates make saving more attractive relative to spending, leading individuals and institutions to save more.

In the Savings-Investment Diagram, We Know That an Increase in the Real